Debt-laden Co-op to flog its farms
While the Co-op's bank losses have hit £1.3bn there's a smidgen of good news for the troubled group - rising land value prices. The Co-op is set to to sell off 17,800 acres of farmland across England and Scotland.
The timing is spot-on: while much has been made about house price gains in London and the South, British farmland has soared almost 275% in value in the last 10 years. %VIRTUAL-SkimlinksPromo%
"Going concern"The Co-op told AOL Money that all of its 15 farms would be sold. "The idea is to sell the whole thing as a going concern," said Co-op spokesperson Dave Smith, "so that we protect jobs of our 250 members of staff."
Technically the land is already on the market and the Co-op aims to sell the whole lot to an individual buyer - that's the hope says Smith. Expect some foreign buyer interest, given increasing interest in investing in UK land, seen as stable and secure - and an asset class that's finite.
Star performer"This is one of the most significant agricultural sales in recent years," Tom Raynham, head of agricultural investment at Knight Frank, told Reuters. Although the UK land price performance has been very strong indeed - around 14% per annum - international land prices based on 15 markets have increased at 20%.
However there has also been concern that land prices may start to cool soon. "The general view is that growth is going to continue in the UK, though values are very high and how long it can be sustained is unclear," James Cairns, from Savills international land markets, told the Telegraph earlier in the month.
Cash-hungryCertainly the indebted Co-op Group - including its funeral director business, its retail arm and pharmacies - could do with the cash. Lord Myners, the City veteran who recently quit the Co-op on opposition to his plans to overhaul the operation fears his recommended changes may still not be taken seriously.
Myners' reforms will be voted on in May at the Group's AGM. Meanwhile the tension between Co-op governance change, while retaining the company's entrenched co-operative, democratic principles, remains high.
Can the Co-op's regional members and directors be trusted to run the Co-op, holding management to account? Or is today's complex, super-aggressive business environment too much for them?